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Illumina Plummets 23%, Analysts Move To The Sidelines Amid Q1 Warning

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Illumina, Inc. (NASDAQ: ILMN) plunged about 26 percent after the company reported disappointing preliminary first quarter results on weaker-than-expected HiSeq demand.

Illumina expects to record revenue of $572 million in the first quarter. Even though the company's guidance represents a 6 percent increase year-over-year, it missed Street' consensus view of $596.33 million.

The company now expects full year revenue growth of about 12 percent, down from prior guidance of about 16 percent due to softer demand in Europe.

Analysts have moved to the sidelines post the announcement from Illumina. BofA downgraded the stock to Neutral, and Cantor Fitzgerald's Bryan Brokmeier downgraded it from Buy to Hold, while reducing the price target from $225 to $165.

Mizuho is staying on the sidelines as it reiterated Neutral rating and $150 price target.

"Strong comps, slowing top line growth, and improving competitors have been primary reasons keeping us on the sidelines, with premium valuation adding to the risk," Mizuho analysts wrote in a note.

Related Link: Cantor Downgrades Illumina, Is Waiting For This To Happen

Daniel Arias of Citi said it's unclear what the driving EU dynamic at play is right now, but something is clearly "amiss." Arias has a target price of $210.

"While the long-term NGS market penetration story remains in-tact for ILMN, the company is in serious need of an execution streak over the coming quarters. We remain Buy rated, but are removing the stock from our focus list as we see few near-term catalysts that will dramatically reverse sentiment in 1H16," Arias said in a note.

Meanwhile, Steve Beuchaw of Morgan Stanley is more concerned on clinical slowdown rather than the slowness in Europe. The analyst has an Equal-weight rating and cut the price target by $20 to $140.

Beuchaw said Illumina's clinical franchises account for about 20 percent of sales and comprises more than 50 percent of the company's total available market. However, clinical channel growth for the company is at 20 percent in the first quarter, down from greater than 50 percent in 2014, 40-50 percent in the first half of 2015, and 20-30 percent in the second half of 2015.

"Our diligence since new reimbursement rates were finalized in late'15 has found increasing caution in the channel, though this is more specific to the US," Beuchaw noted.

The analyst also said concerns in Europe are "no more acute," as his meetings with management of various firms suggest that outside sequencing the slowing in Europe is less significant.

Meanwhile, Avondale Partners maintained its Market Perform rating on the stock, but cut the price target to $160 from $175.

Latest Ratings for ILMN

DateFirmActionFromTo
Jan 2020Wells FargoMaintainsUnderweight
Jan 2020CitigroupMaintainsBuy
Jan 2020Piper SandlerMaintainsOverweight

View More Analyst Ratings for ILMN
View the Latest Analyst Ratings

Posted-In: Bank of AmericaAnalyst Color News Guidance Downgrades Price Target Reiteration Analyst Ratings

 

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